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Jefferies (JEF) Stock Up 4.4% on Q1 Earnings & Revenue Beat

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Shares of Jefferies Financial Group Inc. (JEF - Free Report) gained 4.4% in response to better-than-expected first-quarter fiscal 2022 (ended Feb 28) results. Adjusted earnings per share of $1.24 handily surpassed the Zacks Consensus Estimate of 92 cents. The bottom line also compared favorably with $1.14 earned in the prior-year quarter.

Results were hampered by lower revenues as segment performance was dismal. On the other hand, a decline in expenses was a tailwind.

Results in the reported quarter excluded certain non-recurring items. After including those, net income attributable to shareholders was $327.4 million, down 43.8% year over year.

Revenues & Expenses Fall

Net revenues were $1.73 billion, down 30.4% year over year. However, the top line beat the Zacks Consensus Estimate of $1.60 billion.

Total expenses were $1.31 billion, down 21.8%. The fall was mainly due to lower compensation and benefits costs and interest expense.

Segment Performance

Investment Banking and Capital Markets: Net revenues were $1.48 billion, down 25.4% from the prior-year quarter. Expenses totaled $1.06 billion, down 25.9%.

Asset Management: Net revenues were $60 million, which plunged 73.8% from the year-ago quarter. Expenses totaled $49.4 million, down 2.9%.    

Merchant Banking: Net revenues were $189.5 million, falling 29% from the prior-year quarter. Expenses were $184 million, up 12%.

Corporate: Net revenues were $0.7 million, up 26.4% from the prior-year period. Expenses were $12.5 million, down 40.6%.

Share Repurchase Update

During the fiscal first quarter, Jefferies repurchased 10.04 million shares for $364.2 million.

The company’s board of directors increased the share buyback authorization to a total of $250 million.

Our Take

Steady decent underwriting and advisory businesses and lower expenses will support Jefferies’ financials. However, challenging market conditions for fixed income trading operations pose a concern.

Currently, Jefferies carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Other Banks

JPMorgan (JPM - Free Report) is slated to report fourth-quarter 2021 results on Apr 13.

Over the past 30 days, the Zacks Consensus Estimate for JPMorgan’s quarterly earnings has moved 1.1% lower to $2.76. This indicates a 38.7% decline from the prior-year quarter.

Bank of America (BAC - Free Report) is scheduled to announce quarterly numbers on Apr 18.

Over the past 30 days, the Zacks Consensus Estimate for Bank of America’s quarterly earnings has moved 1.3% south to 78 cents, implying a 9.3% fall from the prior-year reported number.

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